The Sample Portfolio: Your Keys to a Hedge Fund PM Role ?

If you're aspiring to become a Hedge Fund PM, two things are paramount:

• Clarity of your trading process
• It’s repeatability and consistency

The challenge is making that process clear and actionable for senior decision-makers.

Introducing the Sample Portfolio

Your Sample Portfolio embodies your investment philosophy.

This Portfolio isn’t just a collection of trades; it's an epitome of your structured approach, designed to showcase your trading process.

Your Sample Portfolio's framework outlines benchmarks, objectives, and constraints for your strategies.

If you have your sights set on a Hedge Fund PM role, a well curated Sample Portfolio is invaluable, often overshadowing the importance of your CV.

What Makes a Good Sample Portfolio?

It should reflect your investment philosophy and demonstrate how you put strategies into action.

The heart of your Sample Portfolio should reflect your asset mix, risk management tactics, and performance metrics, all while establishing clear benchmarks, objectives, and constraints.

Why is a Sample Portfolio Indispensable?

Major Hedge Fund decision-makers repeatedly emphasize a consistent theme: “Process”.

“A top candidate stands out by having a process they can articulate, one that is both repeatable and scalable.”

Your Sample Portfolio becomes the lens through which these decision-makers can witness your strategy in real-time: asset selection, weighting, and interaction.

It portrays your investment process, emphasising its repeatability through return engines, specific trades, and their underlying rationales.

Highlighting Your Unique Selling Proposition

In the vast sea of potential PMs, what sets you apart?

Your Sample Portfolio is a tool that pinpoints and amplifies your niche expertise or unique strategies, serving as a potent discussion catalyst during interviews.

Impressing the Multifaceted Stakeholders of a Hedge Fund:

While interviewing with Hedge Funds, remember it’s not only the CIO/PM team you need to win over.

Stakeholders span across domains like Business Development, Risk, and the COO office.

Your Sample Portfolio becomes a beacon, highlighting:

• Risk Analysis: It provides a platform for Hedge Funds to conduct stress tests and simulations. This helps demonstrate the robustness of your strategies, especially under market extremes showing resilience of your process.
• Financial Understanding: It provides insights into the potential costs associated with your strategies, from margin needs to position financing.
• Infrastructure Clarity: Highlight any tools or resources essential for implementing your strategies.
• Expertise Validation: A well-crafted Sample Portfolio emphasises your analytical prowess, foresight, and depth of understanding.

“We need a 1.5+ Sharpe, for at least 3 years”

Many Hedge Funds use this type of metric as an initial candidate filter.

But if you don't meet this criterion, fret not.

Having a Sample Portfolio allows you to showcase and articulate the metrics that validate the effectiveness of your strategy.

Perhaps your Sortino ratios are the standout, perhaps it’s the calmar ratio combined with the correlation to equities/rates, or even the average returns relative to the VaR consumption.

Even if you don’t have a live track record, a backtest can illustrate the potential success of your Sample Portfolio across varied market conditions, validating its reliability and allowing you to highlight the metrics that stand out.

By combining this with the other aspects in this newsletter, you’re putting yourself in a much stronger position.

Steering Your Interview's Narrative

Your sample portfolio empowers you to spotlight pivotal trades during interviews.

Create compelling storylines, emphasising the rationale and outcomes behind these trades.

In essence, your Sample Portfolio transcends being just a trade showcase.

It embodies your unique value and approach, and helps convince decision makers that you’re likely to make a good Hedge Fund PM.

So, even if you're not immediately eyeing a Hedge Fund PM role, embark on your sample portfolio journey now.

It promises to be an indispensable asset, moreso than a CV, making you stand out in a sea of trading candidates.

Cheers,

Mani

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